IBM's Dividend Streak Endures Amid Shift to Software

IBM has maintained its streak of paying a quarterly dividend every year since 1916 and recently announced its 31st consecutive year of dividend increases in early 2026. However, the company's stock performance tells a less comfortable story, with shares down 22.31% year to date as of September 27, 2026.

The quarterly payout has increased by only $0.06 since 2021, rising from $1.63 to today's $1.69. This slow growth is due in part to IBM's shift towards software revenue, which now accounts for nearly 45% of the company's revenue and generates about 80% of its annual recurring revenue.

IBM's free cash flow easily funds its dividend payments, with $14.73B generated in 2025 and $4.8 billion reached through the first half of 2026, against $3.2 billion in dividends paid during that period. Despite this, IBM faces significant debt obligations, totaling $61B, as well as a $10B commitment to quantum computing.

IBM's new direction, driven by CEO Arvind Krishna, has led to a transformation of the business, with improved revenue growth and a strengthened operating model. However, this shift also means that the company is prioritizing reinvestment over payouts, which may be a concern for shareholders who value dividend growth.

Investors will be watching IBM's Q3 earnings report closely, where about one-third of delayed deals have already been closed. The outcome will determine whether free cash flow meets its growth target and whether the streak of 31 consecutive years of dividend increases continues.